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Reflections on SAPPHIRE 2018: SAP’s Strategy Continues to Progress to Support the Best-Run Businesses

/ June 21, 2018

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SAP held its annual SAPPHIRE NOW conference in Orlando, Florida recently, and I was fortunate to attend the event, which was said to be the biggest SAPPHIRE ever.

We were present with the Mendix team to showcase our platform which is brought by SAP under the label SAP Cloud Platform Rapid Development by Mendix and engage with customers to discuss how low code development can help them eliminate backlogs and speed application delivery supporting digital transformation.

As I attended last year’s SAPPHIRE as well, I would like to share some observations on how SAP’s strategy has progressed to support the best-run businesses.

The Big Picture

Let me start sharing some key stats presented by Bill McDermott during his opening keynote.

SAP Sapphire Stats Diagram

With 390K customers across the globe, 77 percent (!) of business transactions worldwide run through SAP systems. Speaking of scale…

SAP’s move to bet the future on the SAP HANA in-memory database is starting to pay big dividends. SAP HANA now has 23K customers and also powers the next generation of its flagship ERP product S/4HANA. In a world where data is seen as the “currency” of the digital economy, SAP HANA and the newly announced SAP HANA Data Management Suite, offer customers the foundation of hyper-scale transaction processing, real-time analytics, search and big data solutions from a single coherent and comprehensive suite.

The customer base of S/4HANA is growing rapidly, and with 8.7 K customers to date, it’s reportedly the fastest-selling product in SAP’s history. I think last year has been a tipping point regarding S/4HANA interest. While it featured prominently on last year’s SAPPHIRE agenda, customers were still on the fence, concerned about the cost and complexity of migrating from SAP ECC. This year was totally different: the vast majority of customers we spoke with at our booth were in the process of doing their first implementation of S/4HANA or have put it on their near-term agenda.

Read this great report from IDC sharing insights from S/4HANA pioneers.

SAP’s Line of Business solutions for human capital management, spend management and e-commerce are being used by 150 million users online. The business network solution for trading and supplier management has three million suppliers connected doing USD 2T worth of business.

SAP Leonardo, the portfolio of emerging technologies like IoT, Machine Learning, and Blockchain, helps customers moving from best practices to “next practices”.

Last but not least, SAP Cloud Platform is maturing rapidly. With 1.5 billion hits per day, it’s becoming a critical enabler of the SAP suite. The SCP team received accolades from Forrester in the latest Public Cloud Platform Wave: “What a difference two years makes. SAP is the most improved platform from our last assessment”.

These are not random stats about individual products and services. If you’ve been following SAP for a while, you’ve seen a pattern evolving. SAP is committed to power the digital enterprise, intelligently connecting people, things, and businesses.

The Intelligent Suite

This became very clear in Hasso Plattner’s keynote, where Bernd Leukert and Robert Ensling took the stage to introduce the concept of the Intelligent Suite. It’s not a product on the price list, but it’s SAP’s commitment to bring the portfolio together in such a way that customers can consume products and services easily in a modular fashion, powered by technologies that will help them run better and smarter.

Make no mistake, this is a big commitment to customers. We’re all familiar with Aristotle’s statement that “The whole is greater than the sum of parts”.  The challenge in the SAP context is that there is no such thing as the “whole” representing the entire customer base. The “Intelligent Enterprise” defined by a discrete manufacturing company leveraging IoT may look dramatically different from what it means for a fashion retailer aspiring to deliver an omni-channel customer experience. Yet they both “run SAP”. Delivering an Intelligent Suite that suits the needs of such a large and diverse customer base is a daunting challenge.  It takes all of SAP’s IP to play the game. It takes all of their talents to kill complexity so that customers can run SAP with simplicity.

SAP Strategy for Intelligent Suite Diagram

The Role of SAP Cloud Platform

I already stated that SAP Cloud Platform is the critical enabler of the Intelligent Suite. To quote Hasso Plattner when he called Bjoern Goerke on stage: “It’s the secret sauce”. Bjoern really nailed it, sharing how SAP Cloud Platform is becoming the system to power the Intelligent Enterprise.

SAP Cloud Platform Diagram

There are four pillars that carry SAP Cloud Platform to drive business agility:

  • Extend SAP’s cloud and on-premises applications, using the “side-by-side” extensibility concept. Instead of changing the core, use the public APIs on SCP to extend SAP ECC, S/4HANA, SuccessFactors or Hybris (now part of the new C/4HANA customer experience offering). This eliminates the cost and maintenance burdens that customizing the core creates. We have learned the hard way that customizing the core creates major obstacles for staying current with new releases.
  • Build new and differentiating apps that may or may not integrate with SAP products. Here’s where the cloud is the fastest track to continuous innovation, turning ideas into applications.
  • Integrate with SAP products and services leveraging the API Business Hub (including identity propagation and single-sign-on), as well as third-party software leveraging the new SAP Cloud Platform Open Connectors with 150 plus out-of-the-box integrations to popular applications.
  • Experience an appealing and engaging way to interact with people and data, regardless of if you’re an employee, business partner or customer/consumer.

Bjoern also re-emphasized the importance of SAP’s multi-cloud strategy. SAP realizes that it doesn’t make sense to try to compete with the hyper-scale cloud platforms like AWS, Azure and Google Cloud Platform, and unlike Salesforce or Oracle they do not want to keep customers captive in a proprietary cloud. SAP Cloud Platform runs on these major public clouds and will run on IBM Cloud Private in the future as well.

My takeaway is that SAP Cloud Platform is such a cornerstone of the Intelligent Suite, that any customer who’s on the journey moving to SAP S/4HANA or C/4HANA should embrace it. Without SCP it will be hard, if not impossible, to extend, build and integrate products from the SAP portfolio, and leverage the emerging technologies such as IoT, ML, and Blockchain that will power the next generation of SAP applications.

The Need for App Development Speed

SAP’s proposition to deliver a digital core and the means to drive digital innovation leveraging SAP Cloud Platform is very powerful. It allows customers to leverage industry best practices covered in packaged applications and create custom solutions to innovate and differentiate from the competition.

Need for App Development Speed Diagram

There’s a manifest need in the SAP customer base to drive digital innovation at a higher pace. A recent survey conducted by Americas’ SAP Users’ Group (ASUG) and sponsored by Mendix has uncovered insights into how SAP users in North America are thinking about cloud adoption and application development.

According to the survey, many companies have the vision to create custom applications to improve operational efficiency (71 percent), increase customer engagement (52 percent), extend ERP systems and migrate legacy systems (45 percent), and differentiate with innovative solutions that integrate emerging technologies (40 percent). In fact, 62 percent of SAP users agree that the demand for custom applications that integrate with and extend SAP systems is growing within organizations.

While the opportunities are abundant, so are the obstacles to successfully executing them. 64 percent of SAP users claim that it would take more than a year to clear all SAP-related custom application projects currently on their backlog, with 30 percent reporting timelines for clearing their workload of more than two years. The top challenges for quickly building these custom apps are high development cost (50 percent), integration challenges (47 percent), and lack of skilled development resources (45 percent).

Traditional development methods fall short to overcome these challenges. It’s too slow, there are too few qualified resources and it doesn’t really align business and IT. The good news is that there’s a way to break out of this vicious circle. SAP has recently launched a new offering called ‘SAP Cloud Platform Rapid Application Development by Mendix, offering a market leading platform for low code development to its customers that accelerates every step in the application lifecycle.

Application Development Lifecycle with Mendix Chart

Low code development is a rapidly emerging category of application platforms to build web and mobile applications at speed and at scale based on visual development, which enables a much larger pool of developers than professional coders. The benefits of leveraging a low-code platform are three-fold:

  • Exceptional Speed to achieve faster business outcomes
  • True Business & IT Collaboration to ensure you build what the business wants
  • Embedded Control to drive innovation at scale

The Rapid in Rapid Application Development is “No Joke” as SAP’s Scott Dillon highlights in his blog describing “Three Things I Learned After Teaching 100+ Customers How to Use the SAP Cloud Platform.”

SAP RAD by Mendix offers frictionless integration to your existing SAP systems, running directly on SAP Cloud Platform with one-click deployment, and offers enterprise scalability and security out-of-the-box. 

Benefits of Low-Code Platforms Chart

A Big Hit

The new offering that extends SAP’s range of developer tools (ABAP and Web IDE) on SAP Cloud Platform turns out to be a big hit. We had incredible traction at our booth, doing non-stop demos for three days in a row and had many conversations with customers seeking ways to speed app delivery.  Our joint customer Andritz was present to share their experience with SAP RAD by Mendix, doing presentations and customer roundtable discussions.

SAP Sapphire 2018 Groundfloor Picture

One day, the event security guard came to warn us that it was way too crowded and that we were blocking the aisle, which he found hazardous in case of fire. Well, sorry about that! Next year we’ll be back with a much larger booth.

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